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realzng the promise

of HR technology
By William Smith, Benefit Software Inc.

business

intelligence:

till waiting for Human Resource Information Systems (HRIS) and employee self-service solutions to deliver on the promise of reduced administrative costs? Hoping to spend more time on the strategic value of the organizations human capital? Maybe it is time to re-evaluate those promises and expectations, or to look beyond them, to learn how these existing solutions can aid in revealing information that will improve how the organization operates. This is the real promise behind HR technologythe ability to think and act strategically by understanding and utilizing the hidden information in HR data. This article discusses the practice of using common HRIS applications to develop business intelligence. While there may be many measures of intelligence, the measure of an organizations business

intelligence is the degree to which it effectively uses information to make better decisions, improve efficiencies and increase productivity.

While business-intelligence tools have yet to gain widespread usage in human resources or total rewards, they are fertile

QUICK LOOK
Running the Numbers For example, Wal-Mart uses consumer data to identify and anticipate purchasing patterns so that it can better serve these customers while simultaneously negotiating better prices. Doesnt it make sense for human resources to be able to respond to employee feedback on compensation and benefits to improve benefits offerings while negotiating better pricing? Another example: Dell uses assembly-line data to streamline production cycles which decreases production costs. Doesnt it make sense for its HR department to be able to project benefits utilization based on emerging demographic trends?
. While there may be many measures of

intelligence, the measure of an organizations business intelligence is the degree to which it effectively uses information to make better decisions, improve efficiencies and increase productivity.
. The strategic application of business

intelligence to many areas can yield key insights that translate into better decisionmaking and streamlined processesfrom determining baseline skills, to using the information in candidate screening, to highlighting benefits costs by department or division, to providing employees with business-intelligence tools that enable them to enhance, as well as determine, their value to the organization.
. According to a 2006 Gartner Group CIO

survey, business intelligence is the No. 1 technical priority for CIOs in 2006.

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A possible first step in proving that human resources can use business intelligence to improve organizational performance is to develop benchmarks using the data collected when exporting compensation and/or benefits information.
ground. Human resources already maintains and has access to large volumes of employee data, including census information, performance appraisals, benefits elections and compensation. The strategic application of business intelligence to any one of these areas can yield key insights that translate into better decision-making and streamlined processesfrom determining baseline skills, to using the information in candidate screening, to highlighting benefits costs by department or division, to providing employees with business-intelligence tools that enable them to enhance, as well as determine, their value to the organization. Readers should ask themselves the following questions: Do you know what division received the greatest percentage salary increase or greatest dollar increase last year? Can you compare your organizations increase to the average increase for all employers in that divisions geographic area? Would you want this information
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before establishing guidelines for this years salary reviews? Would the CFO, CEO or COO be interested in this information? Employee census data can easily be exported from the payroll or HRIS program. To answer the above-mentioned questions, export the following employee data: Name Date of birth Date of hire Gender Location or division Status Current hourly or annual compensation Previous hourly or annual compensation. If the data is exported to Microsoft Excel, it can be sorted by location, status, gender or even date of birth to analyze salaries according to these key demographics. Organizations often wonder how they compare to similar organizations in their state, region or national. For an answer, visit the Bureau of Labor Statistics (BLS) at http://www.bls.gov. The wages, earnings and benefits section on the Web site contains hundreds, if not thousands, of downloadable files that will help organizations compare their compensation to other employers in the area and nationwide.

to analyzing and using business intelligence will enhance access to IT resources. A possible first step in proving that human resources can use business intelligence to improve organizational performance is to develop benchmarks using the data collected when exporting compensation and/or benefits information. While this may involve some effort, you can use the spreadsheet data to explain or forecast compensation trends by a huge number of variablesage, sex, race, manager or supervisor, division or location, just to name a few.

Applying Business intelligence to Organizational Performance According to a March 2006 InformationWeek survey, only 8 percent of companies report that half or more of their employees have access to business-intelligence tools. In two years, however, 38 percent estimate that more than half of their employees will have access to such tools. Human resources should be positioning itself to take advantage of this trend. Also important is a close working relationship with the IT department. According to a 2006 Gartner Group CIO survey, business intelligence is the No. 1 technical priority for CIOs in 2006. HR departments that understand this priority and show how they can contribute

The Connection Between HR Processes and Business Intelligence As the Gartner survey notes, to make the most of business intelligence, HR departments should shift their focus from technology that serves a small segment of decision makers to one that focuses on people and business objectives. In many organizations, human resources is well poised to take advantage of this trend because HRIS applications have been available since the 1990s and employee self-service applications have been available for five or more years. The key to moving forward is turning these technologies into business intelligence tools. Human resources should develop the skill sets that will enable it to query data to determine trends. This new initiative is consistent with the evolving strategic role human resources plays in an organization. The HR or total rewards mission is to improve organizational performance by promoting a focused, motivated and productive workforce, while improving the lives of employees. In this sense, business intelligence and human resources are in sync; it comes down to where and how this tool can be effectively applied within the HR domain. Think about Internet-enabled employee self service applications as an example.

Human resources can use business intelligence to improve results across all aspects of the organization candidate screening, performance appraisals, cost-containment, retention and productivity.
More than 50 percent of U.S. organizations with 1,000 or more employees already take advantage of some form of employee self-service, according to the Cedar 2004 Workforce Technologies Survey, seventh annual edition. However, how many of these organizations take enrollment data and use it to educate supervisors and department and division heads on benefits trends within their areas of responsibility? How many organizations look at the impact of changes in benefits or compensation by department or division and correlate it with changes in operating results? How many can point to data that shows implementing flexible work hours decreases problematic absenteeism? Establishing these connections and then tracking the correlations will reinforce the strategic value of human resources. Employee self-service applications can also help organizations analyze and then anticipate changes in their workforces. Executives should be able to use data

stored on their employee self-service Web site to review utilization statistics. Is the organizations Web site doing a good job of serving non-English speaking employees? How about older employees? If it is not, then chances are the organization is not getting the return on investment (ROI) that it wants or needs. More importantly, companies are not serving one of the fastest-growing segments of the workforce, non-English speaking employees, or the most stable, older employees. Organizations should have a plan for addressing demographic changes in the workforce. If not, then human resources can take the lead in preparing for these changes. An executives first step is to analyze the existing workforce so that he or she can report to management how the demographic makeup of the organization impacts compensation and benefits. He or she should also look at the self-service utilization to report about how different demographic groups interact with their organizations self-service Web sites. From there, an executive can use a wide variety of published data to forecast what the workforces will look like in three, five or even 10 years.

the department or division level. This cooperation is and will become more critical as employers confront major changes in the workforce. In addition, business intelligence can also be a valuable tool in helping organizations prepare for demographic changes in the workforce. For example, it will be increasingly important to demonstrate the impact of an older and more diverse workforce on organizational business goals. Accessing and analyzing business-intelligence data will give human resources an increasingly vital role as organizations adapt to a rapidly changing business environment.
ABOUT THE AUTHOR
William Smith, CPA, is the head of marketing, sales and business development at Benefit Software Inc. He can be reached at wsmith@bsiweb.com.

Applied Business Intelligence In todays digitally driven world, human resources must move beyond gathering data (employee self service) and processing data (carrier updates) to finding ways to extract maximum value from it. The HR staff has ample data from which to detect patterns, streamline processes and improve decision-making. Human resources can use business intelligence to improve results across all aspects of the organizationcandidate screening, performance appraisals, costcontainment, retention and productivity. Working closely with IT and finance, human resources can query data that will help explain operating results at

RESOURCES PLUS
For more information related to this article: Go to www.worldatwork.org/advancedsearch and: Type in this key word string on the search line: HR strategy and technology or business intelligence. Go to www.worldatwork.org/bookstore for: The Brave New World of eHR: Human Resources Management in the Digital Age Corporate Instinct: Building a Knowing Enterprise for the 21st Century.

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